Historically low-interest rates went even lower this week. The 30-year fixed-rate mortgage average from Freddie Mac went down to 3.03%. Remember, that is an average, which means there are plenty of buyers or refinancers getting rates under 3%.
Low rates are helping spur a spike in purchases. The weekly index from the Mortgage Bankers Association shows purchase demand spiked by 5% week-over-week with a 33% annual increase. The side effect for buyers is home prices are also increasing. According to Joel Kan, the MBA’s chief economist, “the average purchase loan size increased to $ 365,700.”
The National Association of Realtors’ Vice President of Demographics and Behavioral Insights, Dr. Jessica Lautz, said Realtors are also seeing a new trend crop up related to who is buying. In her recent appearance on the Mortgage Impact Podcast, Lautz says that single women are probably the largest demographic for homebuyers right now. But, she adds, Realtors are starting to see roommates, not couples, going in on homes together to help save on costs.
“The share of renters who say it’s a good time to buy a home is now at its highest level in five years,” says Doug Duncan, Fannie Mae’s senior vice president and chief economist, “suggesting favorable conditions for first-time home buying, consistent with the recent rebound in home purchase activity.”
Virus worry still driving the market
While the Nasdaq hit a 25th record close for 2020 this week, the market is still ebbing and flowing with COVID-19. Wednesday’s gains were mostly lost on Thursday with the release of the latest jobs report.
For the 16th straight week, data from the Labor Department shows that more than 1 million Americans filed initial unemployment claims (1.314 million). Continuing claims, those made for at least two straight weeks, clocked in at 18.06 million. That’s a drop of nearly 700,000, which means people are getting back into the workforce. But is the rate of re-employment enough to make up the ground lost since March?
The latest Job Openings and Labor Turnover Survey (JOLTS) report from the Bureau of Labor Statistics showed a record number of people were hired, with 6.49 million hires against 4.15 million separations. While that might present as a positive on the surface, there are issues as you dig deeper. For example, the report shows there are currently 5.4 million open jobs. A year ago, there were 7.3 million open jobs and a much lower rate of unemployment. That indicates that companies are potentially contracting and eliminating jobs, not just making temporary changes.
